The British Pound surged on Thursday, after UK Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar stated that they could see a pathway to a possible Brexit deal before the end of the month. The optimistic mood continued on Friday, with talks between UK Brexit Secretary Stephen Barclay and EU chief negotiator Michel Barnier being described as "constructive".

In the initial rally on Friday, GBP/USD soared to above 1.2680, its highest level since early July. Some analysts attributed the dramatic price move to a scramble to cover short positions. Comments from European Council President Donald Tusk while speaking in Nicosia, Cyprus triggered a brief spurt of selling. After Mr. Tusk stated that “time is practically up” for Britain to reach a Brexit deal, GBP/USD sank sharply before stabilizing.

In a tweet posted on Friday, he was cautious yet optimistic:

The UK has still not come forward with a workable, realistic proposal. But I have received promising signals from Taoiseach @LeoVaradkar that a deal is possible. Even the slightest chance must be used. A no deal #Brexit will never be the choice of the EU.

Mr. Tusk also revealed that he told UK Prime Minister Boris Johnson that unless a solution was reached by Friday October 11th, he would publicly announce that he had exhausted all opportunities of securing a deal ahead of the EU summit set to take place on October 17th and 18th.

Looking at the GBP/USD daily chart we can see that price has rallied up to the key resistance level of the 200 period simple moving average - sometimes described as the ‘line in the sand’ dividing bullish and bearish territory. Late in the day the pair made new highs, briefly reaching above 1.27.

Any reviews, news, research, analysis, prices or other information contained in this article is provided as general market commentary, does not constitute investment advice and may undergo changes from time to time. Trading the Financial and Currency Markets on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as to your favor. Before entering trading Financial and Currency Markets, you should carefully consider your investment objectives, level of experience and risk appetite. There is a possibility that you could sustain a loss of some or more of your initial investment and therefore you should not invest money which you cannot afford to lose. You should be aware of all the risks associated with Financial and Currency Markets trading, and in case you have any doubt, rather seek advice from an independent financial advisor. Scandinavian Capital Markets AB, its owners, employees, agents or affiliates do not give investment advice, therefore Scandinavian Capital Markets AB assumes no liability for any loss or damage, including without limitation to, any loss of profit, which may be suffered directly or indirectly from use of or reliance on such information. Scandinavian Capital Markets AB strongly encourages consultation with a licensed representative or financial advisor regarding any particular investment or use of any investment strategy.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD nears weekly highs as risk-on returns

The EUR/USD pair was dragged higher by a soaring Pound, now hovering around 1.1040. The market is all about sentiment, and this last dependent on Brexit and the US-China trade relationship.



GBP/USD surges to 5-month highs on reports of a draft Brexit deal

GBP/USD has leaped toward 1.28, hitting the highest since May. Reports suggest that the UK and the EU are zooming in on a deal. Details are awaited and negotiations continue.


USD/JPY in search of a firm direction, stuck in a range below mid-108.00s

The prevalent risk-on mood weighed on the JPY’s safe-haven status and extended support. A sharp fall in the US bond yields undermined the USD and failed to impress bullish traders.


Cryptos: Incumbents don't know to play well

The Libra project led by Facebook remains on track despite the first defections. Those who have abandoned the project are mostly payment gateways. Bitcoin's lack of tone weighs on Ethereum's mood.

Read more

Gold consolidates in a range below $1500 mark

Gold extended its sideways consolidative price action on Tuesday and remained confined in a narrow trading band, below the key $1500 psychological mark.

Gold News

Forex Majors